Uganda shilling hits record low 11-AUG-2011

Thursday, 11th August, 2011

By Macrines Nyapendi and Agencies

THE Uganda shilling extended its tumble for a sixth straight day to touch a new record low of sh2,755.50 against the dollar on Wednesday. The drop was attributed to heavy importer demand for the dollar and banks covering their positions.

Commercial banks quoted the shilling at 2,730/2,770 against the dollar, weaker than Tuesday’s close of 2,710/2,730.

“We have seen banks covering their positions and some (dollar) demand from importers today,” said Ali Abbas, the head of treasury at Crane Bank. Traders said they expected the local currency to trade in the 2,710-2,780 range during yesterday’s session. The Uganda shilling has depreciated 16.8% this year, tracking the shilling in Kenya, its key trading partner, which has lost 17.9%.

“The demand is strong, yet there is no supply. We have been hoping for the Central Bank’s intervention in vain. If it doesn’t intervene to ease the situation, the shilling might touch the sh2,800 level by Friday,” predicted one dealer.

The airlines also normally shop for dollars to pay taxes every fortnight, he added.